Economic and Financial Affairs Council, 11 March 2014

Council updates its position on the single resolution mechanism

At the Ecofin Council on 11 March, the EU finance ministers updated the mandate for the Greek presidency to negotiate with the European Parliament the outstanding issues on the single resolution mechanism.

The ministers confirmed the Council's determination to conclude the negotiations before the Parliament's election recess in May, i.e. during this parliamentary term.

The Council accordingly updated its negotiating position - the so-called "general approach" agreed in December 2013 - on the following 6 items:

1. Resolution procedure: which institution would be the "ultimate resolution authority"
2. Which institution should decide whether a bank is "failing or likely to fail"
3. Role of the plenary session and the executive session of the single resolution board in an individual resolution decision
4. Voting arrangements at plenary sessions of the single resolution board
5. The possibilities for the Single Resolution Board to contract borrowings for the single resolution fund (SRF)
6. How to determine the contributions to the single resolution fund.

"Today's discussions in the Council on all these issues have been extensive, difficult, but constructive, and we have a new updated mandate […] which allows us the necessary flexibility to go to the trilogue with the Parliament tomorrow", said Greek Minister of Finance Giannis Stournaras, who chaired the meeting, at the press conference.

Based on the updated mandate the Presidency will continue negotiations on 12 March in a "trilogue" - negotiations between the Council, the European Parliament and the European Commission - which will take place in Strasbourg.

Mr Stournaras and Eurogroup President Jeroen Dijsselbloem will participate in tomorrow's trilogue with the Presidency negotiating team. The Eurogroup President chairs the special meeting of ministers to whom the intergovernmental conference has been reporting on the negotiations on the intergovernmental agreement on the SRF.

Single resolution mechanism: background

The single resolution mechanism, once adopted, will be a key element of Europe's future banking union.

According to the draft proposal, it will consist of the single resolution board (SRB) and a single resolution fund (SRF). The purpose of the mechanism is to ensure orderly resolution of failing banks while minimising impact on taxpayers and the real economy.

In principle the resolution mechanism will apply to all banks in the euro area and in those EU countries that choose to participate.

Intergovernmental agreement on the single resolution fund

The Council's general approach agreed in December also includes a commitment to negotiate an intergovernmental agreement on the functioning of the single resolution fund.

The agreement intends to cover arrangements for the transfer of national contributions to the SFR and on their progressive "mutualisation", or gradual merging, into a single fund.

The details of the agreement are being negotiated at an intergovernmental conference with the participation of all the EU member states. Representatives of the European Parliament participate as observers.

The intergovernmental agreement will be finalized when the Council concludes negotiations with the European Parliament on the single resolution mechanism.

Under the Council's general approach, the SRM regulation would enter into force on 1 January 2015. Its functions relating to the bail-in of shareholders and creditors and concerning resolution would apply from 1 January 2016.

Other main items on the agenda

Taxation of savings income

The ministers discussed the amended directive on the taxation of savings income. The aim of the directive is to enhance fight against tax fraud and tax evasion. The Council confirmed broad support for the strengthened rules. The final adoption of the text is expected before the end of March, following endorsement by the European Council.

Follow-up to the G20 ministerial meeting in Sydney

The Council Presidency and the Commission presented the outcome of the meeting of G20 finance ministers and central bank governors held in Sydney on 22 and 23 February.

EU 2030 energy and climate framework

The ministers discussed the economic aspects of the EU's 2030 energy and climate framework in preparation for the European Council meeting which will take place on 20-21 March. They considered the impact of the proposed framework on growth and employment, on energy prices, industrial competitiveness and public finances. The presidency report on the discussion will provide input to the upcoming European Council meeting.